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Underwriting
Definition
Underwriting is the process lenders use to assess a borrower's creditworthiness and determine whether to approve a loan application.
Explanation
During underwriting, the lender verifies your income, assets, employment, credit history, and the property value. An underwriter reviews all documentation and decides whether to approve, deny, or conditionally approve the loan. This is one of the most critical steps in the mortgage process.
The underwriting process typically takes 2-6 weeks. Being prepared with organized documentation can speed up the process significantly.
Example
A lender's underwriter reviews pay stubs, tax returns, bank statements, and credit reports before approving a $350,000 mortgage application.